The British Insurance Brokers’ Association (BIBA) has called for future broker regulation to be more proportionate to the risks that brokers actually pose.
The trade body outlined the key findings of its Future of Regulation research on Monday at a Parliamentary Reception in the House of Commons.
Eric Galbraith , BIBA’s chief executive called for a fresh approach from the new regulator, the Financial Conduct Authority (FCA), to focus much more on the limited regulatory risks posed by insurance brokers.
Galbraith made the call after claiming that the only two significant risks of market failure that insurance brokers pose to the regulator’s objectives are the potential for low quality advice resulting in the mis-selling of products, and the potential for loss of client money. BIBA believes that this should be the focus of new regulation and not the current overly costly and disproportionate system of regulation.
He also said that direct and indirect regulatory costs to general insurance brokers in the UK are three times the size of the second most expensive European State (Ireland).
BIBA says its research recognises the critical contribution made by insurance brokers to the functioning of the UK insurance market. It values the direct and indirect contribution of the general insurance intermediary sector at 1% of GDP, equivalent to other more high profile sectors such as the agricultural sector.
Galbraith said: “Our members tell me repeatedly that they want certainty and so a more prescribed approach on areas like capital requirements and adequate resources would seem to be more appropriate. We are an important